Developing our first state policy agenda

UPDATE: We released our report: A Path to Good-paying Careers for all Michiganders: A 21st Century state policy agenda

Click here to read it:

As we began development of Michigan Future’s first ever state policy agenda, we started by asking ourselves “what outcome do we want to achieve?” Our answer is a rising standard of living for all Michiganders. Being a place with a broad middle class where one can pay the bills, save for retirement and the kids’ education and pass on a better opportunity to your kids.

This, of course, is not how policy makers of both parties normally answer the question of the goal of state economic policy. The answer tends to be jobs (as measured by a low unemployment rate), a growing economy (as measured by gross state product) and/or business friendly (measured by new business investment and/or business friendly rankings).

So first, and most importantly, our Raising Michiganders Living Standards agenda will recommend a new goal for state economic policy. That we explicitly make raising income of all Michiganders the mission.

Why? Because it is clear that a growing economy no longer lifts all boats. For the first time ever Michigan is a low-prosperity state with a strong domestic auto industry.

Structurally in the mid thirties in per capita income and employment earnings (wages, self employment income and employer paid benefits) per capita. In the forties in the proportion of working age adults who have a job.  The Michigan Association of United Ways estimates that 40 percent of Michigan households do not earn enough to pay for basic necessities.

The last time the domestic auto industry was strong in 2000 we were in the teens in per capita income and the twenties in the proportion of those working. 2000 marked the end of a century  in which Michigan was one of the most prosperous places on the planet. Where the middle class was concentrated in high-paid manufacturing employment.

But the economy, primarily due to the mega forces of globalization and technology, is now increasingly knowledge based rather than factory based. Knowledge workers (professionals and managers) are the new core of the middle class.

Michigan is a laggard in the three characteristics that define prosperous states today: (1) the proportion of the economy in knowledge-based services; (2) the proportion of adults with a four year degree and (3) having at least one big metropolitan area––anchored by a vibrant central city––that is even more concentrated in knowledge-based services and college educated adults. Of 52 metros with a population of one million or more metro Detroit is 38th in per capita income and metro Grand Rapids is 49th.

In developing our agenda to raise the living standards of all Michiganders we start with the belief that there are new realities that state policy cannot change:

  • The economy is now predominantly service driven rather than factory driven. And in that economy knowledge-based services are the core of high-paid work
  • Smarter and smarter machines are going to accelerate creative destruction of jobs, occupations and even industries. Which jobs, occupations and industries will be most effected by the continued development of smarter and smarter machines is unpredictable
  • Knowledge-based enterprises and their good-paying jobs are going to be highly concentrated in big metros anchored by vibrant central cities. The only exception being mid-sized metros anchored by major universities. So that Detroit and Grand Rapids regions matter most to Michigan’s return to high prosperity

Clearly, we would prefer these not be realities. It would be far easier to have more Michiganders with higher and rising incomes if we did not have to overcome these new realities. But all that we have learned about how globalization and technology are changing the economy lead us to believe that the most prosperous states will be those that align with––rather than trying to resist/alter––these realities.

The state policy levers we have identified that matter most to the achieving the goal of a rising standard of living for all Michiganders are:

  • Increasing education attainment, particularly the proportion of those with a four year degree or more
  • Creating places where mobile talent from anyplace on the planet wants to live and work with an emphasis on metro Detroit and Grand Rapid, particularly their central cities
  • Insuring inclusive growth. With an emphasis on raising incomes for non college educated adults and their children
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